Technological Innovation: Summary 
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Technological Innovation: Why the U.S. Leads


By:  Dr. Herbert I. Fusfeld

Professor of Management (Retired)

Rensselaer Polytechnic Institute and

Chairman, The Fusfeld Group, Inc.


   This small, readable book begins with a commentary on the use, or misuse, of the word “innovation” in both public and academic debate.  Its focus then turns to “technological innovation” as the intended subject for policies and actions that can stimulate economic growth.


   Drawing on his broad experience in industry and academia as well as an initial period in government R&D, Dr. Fusfeld takes the reader through a knowledgeable analysis of the principal sources of technical change within the U.S. and the part that each sector plays in producing technological innovation.


   Much of current talk about “innovation” appears to confuse “innovation” and “technical change”.  The book shows clearly that the process for producing technical change in the U.S. is alive and well,   based in large part on the massive industrial R&D effort which funds and conducts roughly 70 % of all R&D within the U.S.  The use of that technical change to produce technological innovation requires favorable mechanisms for financing, effective systems for marketing and distribution, competence in business and personnel management, an economic environment favorable to investment, and often skill in international finance.  In an insightful Foreword, Dr. Thomas Begley, Dean of the Lally School of Management and Technology at Rensselaer Polytechnic Institute, refers to these various economic and social systems as “the true heroes” of U.S. leadership in technological innovation.


   Readers pursuing many interests - technical change, science policy, economic growth, or public policy – will surely gain broader perspective about technological innovation from the many issues discussed in this book.  The important roles for university-industry cooperation, the critical nature of industrial R&D in the effective use of technical resources, problems and opportunities in globalization, and the increased involvement of universities in the commercialization of technical advances are all subjects for comment and clarification in the book.  Opportunities and trends are reviewed as are the potential for government participation when appropriate.


   This book provides a clear basis for discussion of issues related to innovation.  It offers a useful overview of research activities at both universities and industry with which many readers may not be familiar. 


Major Points Presented


1.      U.S. capacity for generating technical change makes it the most likely beneficiary to apply or build upon a technical advance regardless of which country created that advance.  The more that emerging countries can produce scientific and technological advances, the greater the opportunity for U.S. institutions to generate technological innovations based upon those advances. Free flow of information and mobility of people are critical to the health of the overall U.S. innovation process.


2.      Policy makers seeking to stimulate U.S. technological innovation must consider that the process requires two separate mechanisms:  the capacity to apply or generate technical change and the use of that change to create economic growth.  The capacity to generate technical change has increased sharply in the past 30 years, largely by industrial research activity, and continued to do so at a somewhat slower rate after the financial crisis of 2008.  There is no evidence to suggest that this capability has been any less productive since 2008.  Thus, if there is less technological innovation since then it is most likely due to reduced effectiveness of the factors needed to convert technical change to economic growth – investment, international trade, and regulations and so on.  Improving those factors should be the focus for government policies on technological innovation.


3.      The ultimate desired goal for technological innovation is the “blockbuster”, a technological breakthrough that not only provides economic growth in its own right but becomes the basis for broad new businesses and growth opportunities.    Consider the major factors that resulted in developing the integrated circuit (IC) – a small chip of incredibly pure silicon on which millions of transistors have been deposited, providing huge memories, storage and computing power for small mobile devices, changing our social lives, political actions, business practices and much else  This evolved over more than 100 years from isolation of silicon, advances in  many fields, constant transfer of technology among these fields, basic advances at universities in electrical conduction in solids, government (largely military) demands and funding, and massive industrial R&D programs and investment. No comparable activity took place after 2008 and, not surprisingly, no IC has emerged.


4.      The status of the U.S. research university as the leading global source for technical advances is   a critical basis for long term technological innovation.  It also  permits that university system to play two important roles in  short term, i.e., ongoing innovative activity -


First, new graduates with advanced degrees in STEM areas (Science, Technology, & Mathematics) have worked with research programs that will be sources of future advances, and are aware of  approaches and trends that can improve current practices.  Those graduates   become instruments for technology transfer to the industries that employ them, most of which will be U.S. corporations.


Second, and perhaps most important, the U.S. research university is today the de facto center for exchanges in science and technology, for the flow of information about technical advances.  That role should be encouraged and formalized by the U.S. government acting through its research universities.  The research faculties and centers of U.S. universities are magnets for their counterparts from other countries.  They ensure that advances in other countries are readily discussed with the U.S. technical community in exchange for the access permitted foreign visitors to U.S. institutions.  And that exchange is of great value to the U.S.


5.      The effectiveness of U.S. universities in the pursuit of education and research requires that they be independent and well supported, but they cannot be, and are not, ivory towers.  Their great value to society and the economy is achieved by a number of mechanisms for interactions with industry and with international institutions that promote the flow of information and the rapid exposure of government and industry to advances in basic science and technology.   Cooperative research centers and university-industry partnerships provide university inputs that can accelerate industrial technologies.  Such mechanisms can be most helpful for large research intensive companies, a fact that may be considered politically incorrect by some concerned with public policy, but can be a factor in stimulating short term and large scale technological innovation.


6.      Universities have expanded their efforts to commercialize the economic potential of technical advances arising from research within the university.   The establishment of incubators on or near campus can add to the training of graduates in business and entrepreneurship.  It can also be a source of income, particularly in biotechnology and pharmaceuticals.  The practice has not been as attractive for other fields, and can be a distraction in some cases.  The university and the economy may be best served if a university start-up can feed into the strategy of a large corporate partner having the necessary facilities and know-how, with appropriate payment to the university.  Such interactions can be valuable university contributions to short term technological innovation.


7.      Foreign students on U.S. campuses have long been a welcome and valuable part of the U.S. economy.  It is a fact that today there is a large and growing percentage of non-U.S. students, particularly from Asia, in graduate STEM courses.  Whether this fact is a problem or opportunity depends on the observer.  Such students are in demand by U.S. corporations to generate economic growth from their technical inputs, but there is ambiguity in U.S. residence and immigration policies.   Government policies must   permit desirable foreign graduates to remain in the U.S. as continuing contributors to growth, and to strengthen long-term ties for future relations with those who return to their home countries. U.S. universities are actively soliciting such students, and should be active in developing mechanisms for their continuing contributions to the U.S. economy.


Summary: Technological Innovation: Why the U.S. Leads


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